Understanding Your Return Rate and How to Improve It

Returns are a natural part of eCommerce. No matter how great your product is, there will always be customers who return it — and that’s okay. But if your return rate keeps rising, that’s a sign you can’t ignore.

In this post, we’ll help you understand exactly what return rate means, how to calculate it, why it matters to your business, and — most importantly — how you can improve it without sacrificing customer satisfaction. Let’s dive in.

What Is Return Rate (and How to Calculate It)

Return rate is the percentage of orders that are returned out of your total sales.

Here’s the formula:

Return Rate (%) = (Number of Returned Orders ÷ Total Orders) x 100

So if you had 1000 orders last month, and 120 of them were returned, your return rate would be:
(120 ÷ 1000) x 100 = 12%

What’s a “normal” return rate?

Well, it depends on your industry.

According to Shopify and other eCommerce benchmarks:

• Fashion/apparel: 20–30%
• Beauty products: 4–6%
• Electronics: 8–10%
• Home goods & furniture: 5–7%

The overall average for online stores is around 16–17%, but this isn’t a number you should blindly follow. For example, if you’re in fashion, a 20% return rate might be standard. But if you’re selling skincare and seeing a 20% return rate, something might be very wrong.

Why You Should Care About Your Return Rate

Many store owners treat returns as a cost of doing business. But if you ignore your return rate, you risk:

1. Losing Profits Silently

Each return can cost you shipping (both ways), repackaging, restocking, and potentially the loss of full retail value. According to some studies, handling a single return can cost between $10–20, and even more if the product can’t be resold at full price.

2. Damaging Customer Experience

A high return rate often signals a mismatch between what customers expect and what they receive. It can mean your sizing is off, your images are misleading, or your shipping damages products. These things chip away at trust — and repeat business.

3. Missing Patterns and Insights

Your return data tells a story. If you analyze it regularly (like with Backsy’s smart return reports), you might discover that most returns come from a certain SKU, or from customers in a specific region, or that returns spike after a particular promotion.

And when you spot the pattern, you can fix it.

5 Practical Ways to Reduce Your Return Rate

Now the good part: how do you improve this metric?

Reducing return rate isn’t about making it hard for people to return items. In fact, the opposite is true — a smooth return process builds customer trust. The key is to prevent the need for returns in the first place.

Let’s explore five strategies that actually work:

1. Improve Product Descriptions and Images

Why this works:
Returns often happen because the product didn’t meet expectations. That could mean the color looked different, the size didn’t fit, or the item had features the customer didn’t anticipate.

What to do:

• Use high-resolution images from multiple angles.
• Show close-ups of textures and details.
• Use videos or try-on demos where possible.
• Include dimensions, size guides, and real-world comparisons.

Example: A shoe store added a sizing chart with foot measurements in centimeters and reduced size-related returns by 18% in one quarter.

2. Offer Pre-Purchase Support (Like Size Guides or Live Chat)

Why this works:
Customers are more confident in their purchase when they feel supported. Helping them before they buy reduces post-purchase regret.

What to do:

• Add a size calculator based on body measurements.
• Use a chat widget or FAQ assistant to answer common questions.
• Offer styling or compatibility guides.

Real-life case: Backsy client EllaFit Activewear added a smart chat assistant for sizing and saw return rates on leggings drop by 23%.

3. Improve Packaging and Fulfillment

Why this works:
A portion of returns happen due to damaged goods or items that look “cheap” on arrival.

What to do:

• Use sturdy, eco-friendly packaging.
• Avoid excessive branding if it might attract theft in transit.
• Add internal padding or protective layers for fragile items.

Bonus tip: Don’t underestimate the unboxing experience. A clean, intentional packaging experience reduces returns and boosts loyalty.

4. Encourage Exchanges Instead of Refunds

Why this works:
If a product isn’t perfect, many customers are open to exchanging — but only if it’s easy.

What to do:

• Offer free exchanges as part of your policy.
• Show alternative colors/sizes at the return step.
• Use an app like Backsy that gives customers a smooth way to exchange in just a few clicks.

Example: A Backsy-powered clothing brand saw 26% of returns converted into exchanges, which preserved the revenue and kept the customer happy.

5. Analyze Return Data and Act on It

Why this works:
Trends hide in your returns data. Digging into them can show you exactly what’s going wrong — and how to fix it.

What to do:

• Use a return management system like Backsy to track which SKUs are returned the most.
• Sort by reason (e.g., “not as described”, “too small”, “arrived damaged”).
• Set a monthly review session to look at trends and brainstorm fixes.

Pro tip: Don’t just look at return rates — look at the reason codes and customer comments. That’s where the gold is.

Let Your Return Rate Work for You

Returns aren’t just a loss — they’re a message. They tell you what your customers want, what they didn’t expect, and how your store experience can be better.

By monitoring your return rate, improving your product presentation, supporting customers pre-sale, and streamlining the exchange process, you’re not just reducing returns — you’re building a smarter, stronger brand.

At Backsy, we believe returns can be a growth opportunity. That’s why we’ve built tools to help merchants not only manage returns but turn them into brand-building moments.

Want to reduce your return rate starting this week?

✅ Try Backsy’s smart analytics to spot high-return items
✅ Set up auto-suggestions for exchanges
✅ Customize your return portal with clear policies and branding
✅ Track trends and customer feedback — all in one place

👉 Start your free trial of Backsy — and make returns work for you, not against you.